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As2 inventories

Yasaswi Gomes new (Finance ) (4475 Points)

12 January 2023

Hi,

Amongst the cost methods like

Standard cost

Retail method

Fifo and

Weighted average,

Retail method if selling value minus gross margin, what is it for standard cost technique? Is a standard cost card used to determine the profit and price from it? An example please.

Txs

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4 Replies

sabyasachi mukherjee (26057 Points)
Replied 13 January 2023

Standard COST IS A VERY PECUILIAR CONCEPT ALTOGETHER.
STANDARDS are being set and pricing techniques are being used.

1 Like

CA Ganesh Agarwala (Audit Senior Manager) (239 Points)
Replied 14 January 2023

Standard cost method:

Under this methods, if you have inventory which is homogenous in nature and the price fluctuation and other cost related to Inventory does not change significantly or there are significant amount of intercompany transactions (between various companies in the group), you can book your inventory at a standard cost (which has to computed at the beginning of a period, the policy for the same should be stated clearly) and at the time of actual purchase the difference between Standard Price and actual cost is booked into various "Variance accounts" and inventory is carried at standard cost.

At The end of the reporting period the variance amount is loaded back to Inventory value based on the method of Inventory valuation followed by the Group.

1 Like

sabyasachi mukherjee (26057 Points)
Replied 15 January 2023

Variance analysis is a pecuiliar concept

1 Like

Yasaswi Gomes new (Finance ) (4475 Points)
Replied 15 January 2023

Could be! Im womdering how it would be like if variance adverse or favourable amounts are added or taken out of closing inventory. Beside, only price variance is inclusive. Atleast, @ CAGanesh told something unique that google doesnt teach us. Standard costimg example is given in various ways.